In my ongoing Accounting 2.0 series (tag here) I’ve been looking at the way SaaS accounting vendors describe their products. A vast number of vendors bandy terms like “fully featured package around”. Often times this is used to describe a product that fulfils a very discrete subset of the accounting function.

Recently some comments around a review I did of AccountsIQ raised the question of what constitutes a fully featured app and what constitutes an ERP and where the divide lies. The comments were in reply to my congratulating those SaaS vendors that consider such functionality as multi-currency, multi location, stock-control and BOM functionality as “core functions”. I came off this discussion wanting to compare the widely accepted SaaS ERP solutions (Netsuite and Intacct) with some second tier offerings. Bear in mind that Netsuite and Intacct are both multi thousand dollar per year solutions – one would only expect a difference between the breadth of functionality a customer can expect from them compared to solutions costing many times less per annum.

I contacted Will Parker from AccountsIQ and asked him to contrast their offering to the offerings of the “big boys”.

Will begun by revisiting the definition of ERP. Wikipedia defines ERP as;

an enterprise-wide information system designed to coordinate all the resources, information, and activities needed to complete business processes… an ERP system supports most of the business system that maintains – in a single database – the data needed for a variety of business functions

It goes on to say that

to be considered an ERP system, a software package must provide the function of at least two systems

Unfortunately this definition gives little guidance as it leave hanging the definition of what “a variety of business functions” actually means. As Will pointed out in theory a vendor with a solution including, for example, accounting and payroll could call itself an ERP in the loosest sense of the word.

In a refreshingly humble touch, Will goes on to say that he does not consider accountsIQ to be an ERP solution due to his feeling that they cover just one area (accounting) of a business’s requirements in the sort of depth that an ERP package really should address it. He also points out that the phrase is widely misinterpreted when people look at a very basic bookkeeping product and then compare that with a much more sophisticated financial accounting platform and then call the high end platform an ERP solution when in fact it isn’t.

It seems then that people mistakenly use the phrase ERP to imply high end or highly sophisticated which isn’t quite accurate as in his opinion a highly sophisticated financial accounting package (i.e. with really good ledgers in it) does not constitute an ERP system – if it doesn’t do payroll, HR, manufacturing, supply chain etc).

It would seem therefore that, going by commonly accepted definitions Netsuite and Intacct can both legitimately purport to be ERP systems because they do cover all of the areas of a enterprise’s operations. Once again however it is important to compare the costs as well as the functionality – AccountsIQ’s enterpriseIQ product for five users will run to USD45 per user based on a five user package – roughly a tenth of the price of “true” ERP offerings.

It has to be pointed out however that there seems to be a move away from monolithic ERP systems to more modular approach. I’m sure my statement will be derided by those over in Enterprise Irregular land who work at the coalface of enterprise IT, but it’s something that anecdotally at least is occurring. Will gives the following example;

we’re speaking to a meat processing company over here in Dublin whose turnover is €900m about using accountsIQ as their accounting platform. Of course their main business processes, the production, packaging, dispatching and tracking of meat cuts are handled by some specific industry applications and not by accountsIQ. In this regard then I would certainly consider us an enterprise scale financial accounting package (we can easily handle their multi site and multi currency operations but we’re really only doing the General Ledger in accounting terms) but again not an ERP solution. In theory Netsuite or Intacct might be able to offer this company an end to end ERP solution.

It’s a little bit of “horses for courses”. Those who want a single vendor, and can work within a single source ERP solutions will be attracted down the single vendor path. Those however wanting more agility would be more likely to take a piecemeal approach.

Swinging it back though to the title of this post – I have to give serious kudos to AccountsIQ for taking a realistic and humble approach towards their offering – contrast that to those who’d have us believe a simple invoicing application fulfils the requirements of all businesses.

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Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. His business interests include a diverse range of industries from manufacturing to property to technology. As a technology commentator he has a broad presence both in the traditional media and extensively online. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

4 responses to “What Does “Fully Featured” Really Mean?”

This is definitely not a question of size or functional richness. I think we should separate a few concepts here:

Breadth of functionality – i.e. the major business processes a system supports, such as financials, projects, human resources, CRM, manufacturing, supply chain management.etc. When you do most of this in an integrated fashion, you have an ERP system, and in that respect, I can accept the first Wikipedia quote. But the rest of the Wikipedia article is quite a joke: accounting and payroll does not make a system “ERP”. Crowdsourcing is great, but expertise does not hurt, either: we have to know when to rely on Wikipedia as a source.

Fully featured to me also includes the richness of functionality within those modules, and is not necessarily a criteria for an ERP system. Intacct was originally a financial package, but as the extended to order entry, inventory ..etc, it is now taking the shape of an ERP-like offering – but I would think NetSuite is functionally richer in most of those areas, outside Intacct‘s core competency, accounting. And SAP is certainly functionally richer than NetSuite, yet they all can be labeled ERP.

High End, Size, Price – these have nothing to do with being considered ERP. Netbooks is (was?) a tiny ERP solution for very small businesses: it pretty much covered most business functions (roles), albeit with not much flexibility, customization options within those areas. (Too bad they are back re-architecting.).

Finally, the ERP moniker is a valid one, albeit it’s fading out – it seems to have the stigma of the 90’s reminding us of expensive, long, sometimes failed implementations, questionable ROI. No wonder the major “ERP” players no longer refer to themselves as such. The only reason the term is still used is that for upcoming players it’s still the simplest way to claim “we’re no longer a single-function company”

In the end it’s all about meeting business requirements, whatever the label is…

@zoli – I’m guessing you saw my hatchet job on this post. We might disagree on some of the details but it looks like we’re not a million miles apart and have a basis for taking discussions forward. That’s helpful and I thank you.

On the ‘ERP’ thing, that now officially stands for European Recycling Program -:)

Of course I’ve seen it, and for the sake of our readers, here’s the link (for some reason the trackback only appears on another post).

What can I say – I’m glad you’re calling it a hatchet job, because it really is. As you can see, we, bloggers here disagree from time to time, but we can debate our views publicly, to the benefit of readers, without switching to attack mode, and I’d prefer to keep it that way…

Stop press – despite previous comments suggesting that ERp level functionality in SaaS is a misnomer, and in fact that ERP is a long dead moniker, it seems I’m now joined in this assertion by others. It’s nice to not be alone.